What You Really Need To Know About Real Estate Investment

One of the biggest issues plaguing the economy these days is real estate investment. It is strange indeed but in spite of the great housing crash in America some time ago, people are still inclined to believe their homes are safe long-term investment solutions. It is even considered the best long-term investment.

Over long periods of time, housing prices begin waning. This is a fact and history is proof of it. The popular notion shared by people is that the value of their home will eventually outweigh the cost of inflation. This is not necessarily so. The idea that home prices will increase was perpetuated by the housing bubble of the 2000s.

Most Americans believed that owning a house was essential to fulfillment of the “Great American Dream”. Initially the interest rates were affordable and this was adequate reason to convince people that owning a home was the right thing to do. It didn’t happen overnight for sure. Sub prime mortgages (those mortgages given out to people who had below par credit rating) were being handed out left, right and center and accounted for 20% of the market share. Many late payments, defaults, and bank crashes later; well we all know what that led to. It left the whole world reeling.

This is the down low on the state of real estate investment today and why we ought to learn from history.

Expectations Vs Realities

Expectations Vs Realities

Home for sale

A home is the largest investment for most people. Inflated expectations of this ‘largest investment’ say experts, lead down the path to financial disappointment. Sadly what consumers are blind to is that their home value is lesser than the mortgages owed. When the value of the home depreciates, funds from the sale of a home cannot even pay for their retirement anymore.

Sale-time expectations

This one is going to hit hard. A hefty chunk of people out there actually think that their home, once on the market can be sold off in as little as 2 weeks. The fact is that, the average time on the market is about 4 weeks and a quarter of the homes for sale languish on for market for more than 17 weeks even! So, plan ahead!

It is not only about reaping profits

When selling a home you also should be prepared to make certain expenses to make the property sale ready. For instance, you would need to spend money on repairs, improving curb appeal, and also to pay the agents.

Asking prices

Another bubble that we’re going to burst for you. Sellers truly believe that every buyer will see their home, get that love struck rush and happily fork over the asking price without further ado. Not so. Statistics back this up too. The average home sells for 97% of the asking price and less than half of sellers have to reduce the asking price at least once.

The home search

Now that you have received your stamp of approval and been pre-approved everything should be easy, peasy and pie! Your borrowable power has been established. Let’s go find ourselves a home! The harsh reality says that the big home search usually takes about 10 weeks and 10 viewings!

Time spent in the house

With the old house sold off, new home owners usually entertain ideas that they will reside in their new place for 12 years. The truth is that new owners barely stay put for 10 years.

And so begins the entire cycle all over again.

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